Early Repayment Charge (ERC) query

Burnley_Lad

Are early repayment charges a percentage of the amount that was initially borrowed, or a percentage of the outstanding balance at the time of intended repayment?

Edi81

It’s typically linked to the value of the overpayment. Which lender?

Burnley_Lad

Edi81 said:

It’s typically linked to the value of the overpayment. Which lender?

Thanks for your reply.  It's Nationwide.  I've not made any overpayments, but I'm in the final year of a 5 year fixed rate, so the ERC is 1%, but I'm unsure as to whether it's 1% of the initial amount borrowed or 1% of the current outstanding balance.

amnblog

It's the amount you pay off, over and above the annual allowance you have on the contract (which is 10% of the initial balance, minus any administration fees). 

If the thinking is, I can pay the erp and still be ahead as I can get a better rate today rather than waiting until next year - then be aware it is unlikely to work mathematically

If you are moving home. remember that Nationwide will allow you to take the mortgage product with you without penalty (subject to underwriting on the new mortgage).

getmore4less

Burnley_Lad said:

Edi81 said:

It’s typically linked to the value of the overpayment. Which lender?

Thanks for your reply.  It's Nationwide.  I've not made any overpayments, but I'm in the final year of a 5 year fixed rate, so the ERC is 1%, but I'm unsure as to whether it's 1% of the initial amount borrowed or 1% of the current outstanding balance.

What rate is the mortgage.
Often you can't save the penalty.

Depends on reason to incur the ERC.